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The effects of test scores and truancy on youth unemployment and inactivity: A simultaneous equations approach

Research output: Contribution to journalJournal articlepeer-review

Published
<mark>Journal publication date</mark>1/10/2020
<mark>Journal</mark>Empirical Economics
Volume59
Number of pages33
Pages (from-to)1799–1831
Publication StatusPublished
Early online date16/04/19
<mark>Original language</mark>English

Abstract

We analyse the relationships between test scores, truancy and labour market outcomes for youths. Our econometric approach enables us to disentangle the observable direct and indirect effects of truancy and test scores on the risk of unemployment or ‘Not in Education, Employment or Training’ (NEET) from their unobserved effects. Using data for England and Wales, we show that models of youth unemployment and NEET that ignore the correlation between the unobservable determinants of test scores and truancy will lead to misleading inference about the strength of their effects. Truancy has an indirect observed effect on labour market outcomes via its effect on test scores, and a weak direct effect. The unobserved component of truancy has a direct effect on labour market outcomes. Test scores have a direct effect on those outcomes, but also mitigate the detrimental effects of truancy. Our analysis raises important implications for education policy.